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To
OTC Journal Members:
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Cross Media
Marketing (AMEX: XMM)- Making New Highs on National Recognition |
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As more fund managers
focus on this company we believe the stock will move higher, and $15 is
easily attainable in the first six months of 2002. We believe this is our
strongest risk/reward stock for 2002. Other, riskier companies may end
up with stronger appreciation, but none with the limited downside risk
associated with the company's projected profitability.
OTC Journal- January
2, 2002 Edition
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While most stocks are coming under
pressure this week in the wake of earnings warnings, new concerns about
increasing interest rates, and the NASDAQ falling back under 1800, Cross
Media Marketing made a new all time high yesterday, finally hitting
the $14 mark.
An unexpected volume and price surge
was caused by positive comments about the company in this week's edition
of Business Week. Another contributing factor was yesterday's announcement
of an acquisition which will add $.05 in earnings this year, bringing the
company's forecast to $1.29 EPS for 2002.
Members who follow this stock should
recall that our price target for 2002 is $20, but it turns out there
is an analyst who is more optimistic. We learned about it from Gene Marcial's
Inside
Wall Street weekly column in the April 8 edition of
Business
Week.
According to Mr. Marcial, analyst
Luis Martins of Taglich Brothers, a research boutique, has a twelve month
price target on the stock of $25, nearly a double from today's levels.
Unlike most of the companies we follow,
one option investors have purchasing shares of Cross Media is the
use of a margin account. While we don't necessarily advocate the use of
excessive leverage, the purchase of Cross Media in a margin account
yields a much greater return if both Mr. Martins and the OTC Journal
turn out to be right. In order to purchase 1000 shares in a margin account
at $13.50, you need only put up half the money, or $6750 plus commissions.
If you then sell 1000 shares at $25
in the future, you will generate $25,000 in cash, less commissions. You
then pay off the margin debit of $6750 plus interest, leaving about $18,000
on an investment of $6750. This equates to a return of 170% return on
invested capital.
Conversely, if the stock goes against
you, the use of leverage will magnify your losses. Also, if the stock drops
precipitously, you could receive a margin call, causing you to pledge more
cash if you wish to continue holding the stock.
We first initiated coverage of Cross
Media on November
5, 2001 at $6.70 per share. If you didn't act, and feel you
have missed the opportunity, you are wrong. This company is just starting
to get the kind of recognition we were anticipating would develop, and
we are looking for more high profile media coverage on this stock in the
near future.
The market environment continues
to favor buying the dips when the market is down, and selling the rallies.
With the NASDAQ dropping below 1800 now is the time to be accumulating
stocks you favor at depressed prices. When the bull market emerges, low
risk buying opportunities will become fewer and farther between.
Here are Gene Marcial's comments
on the company. Click
Here to view a PDF version. Click
Here to read Business Week's web version.
| APRIL 8, 2002
INSIDE WALL STREET
How Cross Media Moves Merchandise
Cross Media Marketing (XMM ) Chairman
and CEO Ron Altbach isn't bashful when it comes to talking about company
prospects. The singer/songwriter, producer, and keyboard player for the
Beach Boys in the 1970s says Cross Media will double its revenues, to $200
million, in 2002. He also forecasts a jump of 20% a year in each of the
following years. Cross Media sells magazine subscriptions, club memberships,
exercise gear, and collectibles to 32 million subscribers. It uses various
marketing channels, including e-mail, direct mail, and Web campaigns. Analyst
Luis Martins of Taglich Brothers, a research boutique, thinks it'll be
a cinch to hit Altbach's goals. He sees sales of $205 million in 2002 and
earnings of $1.25 a share, up from 86 cents in 2001. For 2003, Martins
forecasts sales of $236.5 million and earnings of $1.70 a share. Little
wonder that Cross Media's stock is on a roll, flying from 4.65 on Apr.
16, 2001, to 12.49 on Mar. 27. Martins' 12-month stock price target: 25
a share.
By Gene G. Marcial |
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